Expansion of the E-commerce Sector to Propel the Logistics Market Through 2016-2020, According to Technavio

Technavio research analysts are forecasting positive growth for many segments of the logistics market over the next four years as several markets including the logistics market in APAC, the logistics market in Europe and the 3PL market in the US, will witness an increase in revenues.

Technavio’s market research analysts predict the logistics market in APAC to grow at an impressive CAGR of more than 13% over the forecast period. Factors such as the growing middle-class population, increasing disposable income, and increasing adoption of the Internet and mobile services have led to a significant expansion of the e-commerce sector in APAC. The prospects for growth in the e-commerce sector are also influenced by the presence of an efficient inventory and quick delivery facilities. Therefore, with the expansion of the e-commerce industry, the demand for logistics services is also envisaged to increase in the coming years.

According to Sharan Raj, a lead research analyst at Technavio for transportation and logistics research, “Economic growth across industries such as FMCG and automobile and auto components will increase the demand for logistics services as a result of which the logistics market in the APAC region is expected to witness steady growth over the next few years.”

Aside from the logistics market in APAC, the second most sought after logistics market is the logistics market in Europe, which is expected to grow at a moderate CAGR of close to 7% over the forecast period. In 2015, the e-commerce market in Europe was valued close to USD 480 billion resulting in tremendous demand for professional logistics services that provide high-end logistics and supply chain solutions, along with value added services like assortment and grading of products, packaging, and information management system services. However, only a very few vendors provide such all-inclusive services.

The market is witnessing a trend where shippers prefer contract logistics providers that offer a complete solution as it helps them avoid the tediousness associated with outsourcing different tasks to different vendors. Therefore, it can be estimated that the augmented demand for contract logistics service providers during the forecast period will foster the growth of this market until the end of 2020.

The third-party logistics (3PL) segment dominated the logistics market in Europe and is expected to reach close to USD 45 billion by 2019. Factors such as the rise in intra-regional trades and the relocation of manufacturing facilities to countries such as Bulgaria, Romania, Lithuania, and Latvia, where labor costs are low will contribute to the growth of both the domestic and international transportation logistics in the region. Also, different initiatives have been taken up by the EU to streamline logistics activities for domestic and international trade in Europe. The introduction of such initiatives will lead to the growth of this market over the next few years.

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Technavio’s market research analysts have also predicted a steady growth of over 6% during the period 2016-2020 in the 3PL market in the US. One critical factor that impels market growth is the cost reduction achieved through the use of 3PL services. By outsourcing logistics operations to 3PL providers, companies can improve the overall efficiency of their business processes by focusing on their core competencies. “Another factor that propels the growth of the market is the increase in M&A, which will enable companies to expand their customer base and their portfolio of products, solutions, and services on a global scale,” says Sharan.

Some of the key vendors for the logistics market include CJ Korea Express, Deutsche Post DHL, and Hitachi Transport System for the logistics market in APAC; DB Schenker, Kuehne + Nagel, and SNCF, for logistics market in Europe; C.H. Robinson, Expeditors, and UPS for the 3PL market in the US.

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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